Frequent drivers are feeling the pinch with the recent spike in Petrol prices at almost all the petrol stations around Kampala. Petrol previously was going for around ugx 3,700 but now is at ugx 3,900 sometimes even hitting ugx 3,950.
This is worrisome and might lead to the increase in several other services and commodities such as the price for food like matooke which transported over long distances and the cost burden is often placed on the buyer, taxis and bodabodas won’t fall too far to raise their fare too and even if the fuel price stabilizes, they most likely won’t reduce.
What is the real reason for the increase in Uganda’s fuel prices? Is it because there is scarcity, are we out of stock? Did government increase the tax on petrol stations and fuel hauling businesses? Is it the dollar? So many factors could be blamed but it is none of these.
Many Ugandans want the blame to be the government, because that is what we usually do; but this time it is not. It is something much out of our control.
The major reason is because the oil prices have been going up all over the world from a once mere $40 a barrel to $65 now after a decision by OPEC and several oil producing countries to freeze mining until the price raises and they sell most of their excess reserves.
Initially the move was a fail with prices taking more than 4 months to just cross $50 until Russia accepted to freeze production too and prices spiked. The USA though has been secretly doing some mining in some states like Texas on occasion but not enough to destabilise OPEC’s plan.
Majority of the petroleum used in Uganda is imported from other countries and crosses the Indian ocean before being transported through Mombasa port then driven across Kenya to reach Malaba, the Ugandan border since we are a land locked country.
Our fuel prices are high because OPEC has influenced the global price for a barrel of oil to increase which is affecting us severely. However, this is where we blame the businesses in Uganda and the government – the failure to rely on our petroleum reserve plants.
Idi Amin constructed massive fuel reserve plants in Jinja for scenarios like this, the government is supposed to buy petroleum in bulk at lower prices and store it in them then sell it at a stable relatively lower price to suppliers and fuel stations when the world market price goes high.
This is why oil and gas prices are relatively stable in Europe and USA. Total, Gapco and Shell (now Vivo) all have a lot of reserve tanks I believe should be stocked with fuel but because we have no proper price regulations, they hike the prices too so as to make massive profit as a corporation’s main objective should be.
Will the oil prices go down? If they do, is there hope Ugandan stake holders will also lower their prices or maintain them like they did in the last fuel hike? Time will tell.
Lawk is a mozillian, writes for Spur, Newslibre and consults part time for Every1Mobile and Innovware.
He loves open source, the open web, writing, reading and developing literacy tools that can teach the youth around the world especially in East Africa.